Online Broker Review and Comparison

April 28, 2009

Online broker reviews differ from site to site because every investor has different things they look for in an online brokerage. Comparing brokers is actually the easy part, choosing the right brokerage site for you is the tricky part. So today we have a comparison of online brokers from someone with considerable experience in the financial industry.

Online Broker Review

I was recently asked to compare online brokers and it could not have come at a better time. Recently I ended an eleven year career in the financial services industry and knew I needed to move my 401K from my former employer. I felt that I had enough experience to manage my own funds, and besides, it would be difficult to find a financial advisor to take on my relatively small retirement nest egg.

So as I started off on this path of discovery, I chose to stick with names I knew:

Scottrade

Charles Schwab

TD Ameritrade

Fidelity

E*Trade

Fee Structures and Commissions

Market & Limit Orders

Options

Broker Assisted Trades

Real Time Dow Jones News

Scottrade

$7/Unlimited Shares

$7+$1.25/ contract

$27/Unlimited Shares

Complimentary

Charles Schwab

$12.95+$.015/share over 1,000 shares

$8.95+$.75/ contract

$25.00+online Commission

Complimentary for active traders

TD Ameritrade

$9.99/Unlimited Shares

$9.99+$.75/ contract

$44.99

$29.99/month

E*Trade

$12.99+$.015/share over 2,000 shares

$12.99+$.75/ contract

$45.00+online commission

$29.95/Month

Fidelity

$19.95+$.015/share over 1,000 shares

$19.95+$.75/ contract

$55.00+$.14/ share over 100 shares

Not Available

Quarterly/ Annual Acct. Maintenance Fees

Minimum Initial Deposit

No-Transaction Fee Mutual Funds Available

Account Closing & Transfer Fees

Scottrade

$0/$0

$500

1,150+

$0

Charles Schwab

$0/$0

$1000

2,000+

$50

TD Ameritrade

$0/$0

$2,000($1,000 for IRAs)

1,300+

$75

E*Trade

$40/$160

$1000

1,000+

$60

Fidelity

$0/$0

$2,500

1,400+

$0 ($50 for IRAs)

If that was all the data needed to make the decision, I’d be all set. In the fast paced world of investing, that’s not the case though. What about research? Tools? Customer Service? These are all a bit more subjective.

According to J.D. Power, customers rank research ahead of all categories when determining overall satisfaction. Again, these things can be subjective. I went to three reputable publications and their 2008 annual surveys to see how they rated each of my five in research, as well as a few other subjects:

Research

Smart Money

Barron’s

JD Power

First

TD Ameritrade

Charles Schwab

Charles Schwab

Second

E*Trade

E*Trade

E*Trade

Third

Fidelity

Fidelity

Scottrade

Fourth

Charles Schwab

TD Ameritrade

Fidelity

Fifth

Scottrade

Scottrade

TD Ameritrade

Customer Service

Smart Money

Barron’s

JD Power

First

Charles Schwab

Fidelity

Charles Schwab

Second

Fidelity

Charles Schwab

Scottrade

Third

Scottrade

E*Trade

Fidelity

Fourth

TD Ameritrade

Scottrade

TD Ameritrade

Fifth

E*Trade

TD Ameritrade

E*Trade

Trading Tools

Smart Money

Barron’s

JD Power

First

TD Ameritrade

Fidelity

Charles Schwab

Second

E*Trade

E*Trade

E*Trade

Third

Charles Schwab

TD Ameritrade

Scottrade

Fourth

Fidelity

Charles Schwab

Fidelity

Fifth

Scottrade

Scottrade

TD Ameritrade

Overall Experience

Smart Money

Barron’s

JD Power

First

Charles Schwab

Fidelity

Scottrade

Second

Fidelity

Scottrade

Charles Schwab

Third

Scottrade

Charles Schwab

TD Ameritrade

Fourth

TD Ameritrade

TD Ameritrade

Fidelity

Fifth

E*Trade

E*Trade

E*Trade

You can spend your whole life doing research, but eventually you actually need to DO something. Choosing an online broker is different for every individual. For one person it will be all about the fees. For others, it might be the research. Yet other people will get their research from other avenues and care most about whether the company takes care of them.

Whether it’s one of these five, or any of the other online brokers out there, make sure you are choosing one for the right reasons and not because your golf buddy or the lady in the church choir uses a particular company. Just like any other investment, it has to be right for you.

Contributed by Victor Alfieri

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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.